These are scary times for managers in big companies. Even before the internet and globalization, their track record for dealing with major, disruptive change was not good. Out of hundreds of department stores, for example, only one Dayton Hudson became a leader in discounting retailing. Not one of the minicomputer companies succeeded in the personal computer business. Medical and business schools are struggling and failing to change their curricula fast enough to train the types of doctors and managers their markets need. The list could go on.

Its not managers in big companies can't see disruptive changes coming. Usually they can. Nor do they lack resources to confront them. Most big companies have talented managers and specialists, strong product portfolios, first-rate technological know-how, and deep pockets. What managers lack is a habit of thinking about their organization's capabilities as carefully as they think about individual people's capabilities.

One of the hallmarks of a great manager is the ability to identify the right person for the right job and to train employees to succeed at the jobs they're given. But unfortunately, most managers assume that if each person working on a project is well matched to the job, then the organization in which they work will be, too. Often that is not the case. One could put two sets of identically capable people to work in different organizations, and what they accomplished would be significantly different. That's because organizations themselves independent of the people and other resources in them have capabilities. To succeed consistently, good managers need to be skilled not just in assessing people but also in assessing the abilities and disabilities of their organization as a whole.